Per the United States federal government, Medicaid is defined as a public insurance program that provides health coverage to low-income families and individuals, including children, parents, pregnant women, seniors, and people with disabilities. With the Affordable Care Act (ACA) being enacted in 2010, Medicaid was expanded to cover more people; however, enrollment in this expansion is optional and, as of 2021, Texas has not enrolled. To understand why this is the case, we have put together a list of some of the pros and cons of Medicaid expansion in Texas.
How Does Medicaid Work?
Medicaid funds come from both the federal government and the state, with each state operating its own Medicaid program (within federally established guidelines). These guidelines are relatively vague and states have a large degree of freedom when it comes to designing and implementing their Medicaid programs. Because of this, Medicaid eligibility and benefits can, and often do, vary widely from state to state.
Medicaid is oftentimes confused with Medicare, the federal government health insurance program for individuals over 65, as well as some individuals with disabilities. To be fair, there is some overlap between the two; nearly 10 million low-income seniors and people with disabilities—sometimes referred to as ‘dual eligibles’—are enrolled in both Medicare and Medicaid. This can make discourse around the two programs a bit unclear at times.
Medicaid is a counter-cyclical program meaning its enrollment expands to meet rising needs during an economic downturn, when people lose their jobs and job-based health coverage. For example, during the Great Recession of 2007-2009, more than 10 million people—roughly half of them children—enrolled in Medicaid. As of May 2021, 75.9 Million people are covered by Medicaid due to the ongoing COVID-19 pandemic.
States have guaranteed federal financial support for part of the cost of their Medicaid programs, but in order to receive federal funding, states must cover certain mandatory populations including:
- Children aged 18 and under in families with income below 138% of the federal poverty level ($29,974 for a family of three in 2020)
- Individuals who are pregnant and have income below 138% of the poverty line
- Certain parents or caretakers with very low income
- Most seniors and people with disabilities who receive cash assistance through the Supplemental Security Income (SSI) program
The Affordable Care Act and Medicaid Expansion
Commonly referred to as Obamacare, the Affordable Care Act was enacted in 2010, and is regarded as the most significant expansion of health coverage since the original enactment of Medicare and Medicaid. The ACA was intended to extend coverage to adults who did not fit the mandatory criteria but also did not have their own insurance coverage. However, a 2012 Supreme Court ruling gave states the choice of whether or not to expand their Medicaid programs.
To date, 12 states have declined to expand Medicaid, one of which being Texas. In these states, adults over 21 are generally ineligible for Medicaid, no matter how low their incomes are. Exceptions to this are people who are pregnant, caring for children, the elderly, or have a disability. This means even parents are ineligible if their income exceeds just 42% of the poverty line ($9,122 for a family of three).
With so many people falling into the gaps, as many as 1 million newly eligible residents (most of which are people of color), Some Texas representatives have been pushing for the state to expand Medicaid. In April 2021, an effort by a bipartisan coalition of state lawmakers to expand Medicaid became mired in opposition and never got a hearing.
The Pros and Cons of Medicaid Expansion in Texas
Generally speaking, Medicaid expansion would be a very good financial deal for states; after picking up all expansion costs for the first three years, the federal government would then pay 90% of expansion costs on a permanent basis. And by greatly reducing the number of uninsured, the expansion will save states and localities substantial sums of money on uncompensated care for the uninsured.
Expanding Medicaid in Texas would drop the uninsured rate, offer people a level of financial security (particularly low-income individuals), and reduce cost-shifting issues within the economy. And, again, due to the federal government, this would all be at minimal cost for Texas.
The loudest critics of Medicaid expansion argue that doing such a thing would increase wait times when trying to see a doctor and would stop the benefits of private insurance. Indeed, when the Affordable Care Act was first enacted, wait times increased significantly, especially in rural areas. Per Northwestern University, A study published in the Health Services Research journal in November found that emergency department wait times increased 10% in states that expanded Medicaid.
However, this longer wait time can largely be attributed to the lack of access to healthcare facilities, which has been a longstanding problem in the US. Even before Medicaid, poor and rural populations were already underserved, so the increase in wait times is not a fault of Medicaid expansion. In actuality, the increased waiting time could suggest that more people in these underserved areas finally got access to Medicaid through the ACA’s expansion, which is ultimately a positive factor.
Regarding the utility of private insurance in the world of Medicaid expansion, the argument is that since covered individuals cannot be charged maximum rates (the rates are pre-negotiated with private insurers), under Medicaid, medical providers could attempt to maximize their payments through various means such as unneeded diagnoses.
Currently, private insurers already charge more than they claim, once you factor in things such as visits to out-of-network healthcare providers, and prior authorization decisions. Additionally, Medical providers who intentionally misdiagnose patients could be subject to medical malpractice suits, regardless of insurance status. Depending on the severity of the misdiagnosis, ensuing lawsuits could involve criminal charges. The downsides to doing this are far more severe than the potential ‘upsides,’ which makes it highly unlikely that this would become a widespread problem.
Expanding Medicaid in Texas
As someone who has spent years providing service to Houston’s historically underserved communities, I have seen firsthand the problems with our current Medicaid system. Leaving so many Texans stuck without access to insurance is immoral and financially irresponsible, something Texas lawmakers need to understand.